Bankruptcy & Unemployment

Based on the unemployment and bankruptcy data posted yesterday, I put something together for the time period where I was able to obtain data for both unemployment (from Statistics Canada) and bankruptcies (from the Office of the Superintendent of Bankruptcy Canada). This covers the period from January 1991 to April 2010.

Here’s my chart of the data.

What I found interesting was the disconnect between the two during the 90’s and how they seem to more closely correlate in the last ten years. Granted there is a problem with making a direct comparison, since one is a percentage and the other is a raw number, but it still would be reasonable to expect them to move in the same direction.

I split the data set in half (116 observations each) used Excel 2007 to calculate correlations for the two periods (Jan ’91 to Aug ’00 & Sept ’00 to Apr ’10) and here’s the results.

It’s interesting to observe the relatively moderate rate of bankruptcy during the ’90’s (unemployment peaked at 12.1% in Nov ’92 but bankruptcies only start rising in the late ’90’s, hitting a peak of 8,507 in Apr ’97) and the much higher rate currently (unemployment peaked at 8.7% in Aug ’10 and bankruptcies peaking immediately thereafter at 12,305 in Sept ’10).